Courtesy of Doug Short.
The latest Ceridian-UCLA Pulse of Commerce Index (PCI), a measure of the economy based on diesel fuel consumption, is now available. The published report hightlights the 1.4% decline in August with the subtitle Confirming a “Stalled” Economy. Here is an excerpt from the report followed by a pair of charts to illustrate the behavior of this indicator, the second of which adjusts for population growth.
The Ceridian-UCLA Pulse of Commerce Index® (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation fell 1.4 percent in August on a seasonally and workday adjusted basis, following a 0.2 percent decline in July.
Based on the July and August data, the PCI will likely decline in the third quarter and suggests GDP growth of zero to 1.0 percent. While many may interpret this as evidence of an impending recession, we experienced similarly sluggish PCI and GDP growth in the aftermath of the 2001 recession, highlighted in the figure below with an ellipse. During that time, the economy didn?t really get moving until a wave of new home ownership rose. Best therefore to consider a slow-growth alternative to a recession ? stumbling forward, waiting to get the energy to run again, but not falling down. This could go on for some time.
Weakness in the PCI over the previous months called for a 0.0 percent change in the July Industrial Production — the initial release of 0.9 percent was stronger, although subject to revisions. The August PCI weakness suggests a 0.26 percent decline in Industrial Production when it’s released on September 15. (PDF full report)
The first chart shows the PCI index unadjusted and seasonally adusted. As we can readily observe, the index had been trending up since end end of the Great Recession, but it has yet to acheive the highs of the immediate pre-recession months and now appears stalled. In fact, we’re tracking at approximately the same range as May 2006.
In the chart below the 3-month moving avereage of the PCI is shown with the dotted blue line. The solid line is the same moving average of the data series adjusted for population growth based on the Bureau of Economic Analysis mid-month population data, which is available from the St. Louis Federal Reserve here.
Interpreting the Data
“The economy is stalled” is a major theme in the latest Ceridian-UCLA report, but the report also forecasts slow growth rather than a recession. The workday and seasonally adjusted three-month moving average of the index is in fact stalled at the pre-recession level of May 2006. However, on a population adjusted basis, the current index level is about where it was in September 2004.
